<PAGE> 1
Registration Statement No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THE TRAVELERS INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
CONNECTICUT
(State or other jurisdiction of incorporation or organization)
I.R.S. Employer Identification Number: 06-0566090
One Tower Square, Hartford, Connecticut 06183 (860) 277-0111
(Address, including Zip Code, and Telephone Number, including Area Code,
of Registrant's Principal Executive Offices)
Ernest J. Wright
Secretary
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
(860) 277-4345
(Name, Address, including Zip Code, and Telephone Number,
including Area Code of Agent for Service)
Approximate date of commencement of proposed sale to the public: The investment
option interests covered by this registration statement are to be issued from
time to time after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. X
---
If the Registrant elects to deliver its latest Annual Report to
security-holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box.
---
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
---
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering .
---
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering .
---
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
---
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Title of Each Class Proposed
of Securities to be Amount to be Proposed Maximum Maximum Aggregate Amount of
Registered Registered Offering Price Per Unit Offering Price* Registration Fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Modified Guaranteed Not Applicable* Not Applicable* $200,000,000 $55,600
Annuity Contracts
- ----------------------------------------------------------------------------------------------------------
</TABLE>
*The maximum aggregate offering price is estimated solely for the purpose of
determining the registration fee. The amount being registered and the proposed
maximum offering price per share per unit are not applicable in that these
contracts are not issued in predetermined amounts or units.
<PAGE> 2
THE TRAVELERS INSURANCE COMPANY
REGISTERED FIXED ACCOUNT OPTION
FOR USE WITH GROUP ANNUITY CONTRACTS
The Fixed Account Option described in this prospectus is available only in
conjunction with group variable annuity contracts (the "contracts") issued by
The Travelers Insurance Company (the "Company") and funded by The Travelers
Separate Account QP for Variable Annuities (the "Separate Account"). The Company
may, in the future, offer the Fixed Account option to additional contracts
funded through other separate accounts. The Separate Account in turn purchases
shares in certain underlying mutual funds. The underlying mutual funds are
described in the mutual fund prospectuses. The specific features of the Contract
and the Separate Account are disclosed in greater detail in the Contract
prospectus. This prospectus must be accompanied by and read in conjunction with
the Contract prospectus and the mutual fund prospectuses.
The group annuity contracts may be issued to Contract Owners on an unallocated
or allocated basis.
This prospectus explains:
- the Fixed Account Option
- Travelers Insurance Company
- the Interest Rates
- Transfers to and from the Fixed Account Option
- Surrenders
- Market Value Adjustment
- other aspects of the Fixed Account Option
The Travelers Insurance Company, One Tower Square, Hartford, Connecticut 06183,
is the issuer of the Contracts; CFBDS, Inc., 22 Milk St., Boston, MA, is the
principal underwriter and distributor of the Contracts.
THIS PROSPECTUS IS ACCOMPANIED BY A COPY OF THE COMPANY'S LATEST ANNUAL REPORT
ON FORM 10-K FOR THE PERIOD ENDED DECEMBER 31, 1998, WHICH CONTAINS ADDITIONAL
INFORMATION ABOUT THE COMPANY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MUTUAL FUNDS, ANNUITIES AND INSURANCE PRODUCTS ARE NOT DEPOSITS OF ANY BANK, AND
ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY.
PROSPECTUS DATED MAY 1, 1999.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Glossary of Special Terms................................... 3
Summary..................................................... 4
The Insurance Company....................................... 5
Year 2000 Compliance........................................ 5
The Fixed Account Option.................................... 5
The Accumulation Period................................... 6
Purchase Payments...................................... 6
Declared Interest Rates of the Initial and Subsequent
Renewal Periods....................................... 6
Cash Values............................................ 6
Transfers from the Fixed Account....................... 6
Transfers to the Fixed Account......................... 7
Surrenders............................................. 7
General.............................................. 7
Payment of Full or Partial Surrenders................ 7
Contract Termination................................. 7
Annuity Period............................................ 9
Investments by the Company.................................. 9
Distribution of the Contracts............................... 9
Federal Income Tax Considerations........................... 10
Taxation of the Company................................... 10
Information Regarding the Contracts....................... 10
Available Information....................................... 10
Incorporation of Certain Documents by Reference............. 10
Legal Opinion............................................... 11
Experts..................................................... 11
</TABLE>
2
<PAGE> 4
GLOSSARY OF SPECIAL TERMS
- --------------------------------------------------------------------------------
ACCUMULATION PERIOD: The period before annuity payments begin.
ANNUITANT: A Participant on whose life Annuity payments are to be made under a
contract.
ANNUITY: Payment of income for a stated period or amount.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to begin.
ANNUITY PERIOD: The period during which Annuity payments are made.
CASH SURRENDER VALUE: The Cash Value less any amounts deducted upon surrender,
any applicable premium tax and any outstanding loans.
CASH VALUE: The Purchase Payment(s) plus all interest earned, minus all
surrenders, charges and applicable premium taxes previously deducted.
COMPETING FUND: Any investment option under the Plan, which in our opinion,
consists primarily of fixed income securities and/or money market instruments.
CONTRACT OWNER: The employer or entity owning the contract.
CONTRACT YEAR: Each 12-month period beginning with the effective date of the
contract.
DECLARED INTEREST RATE(S): One or more rates of interest which may be declared
by the Company. Such rates will never be less than the guaranteed interest rate
stated in the contract and may apply to some or all of the values under the
Fixed Account Option for periods of time determined by the Company.
FIXED ACCOUNT OPTION: An annuity option which does not vary with the investment
experience of a Separate Account as described in this Prospectus.
GENERAL ACCOUNT: The General Account of the Company that holds values
attributable to the Fixed Account Option.
GUARANTEE PERIOD: The period between the initial Premium Payment or Renewal Date
and the Maturity Date during which a Guaranteed Interest Rate is credited.
HOME OFFICE: The Travelers Insurance Company (sometimes referred to as the
"Company") located at One Tower Square, Hartford, Connecticut 06183.
IN WRITING: A written form satisfactory to us and received at our Home Office.
MARKET VALUE ADJUSTMENT: The Market Value Adjustment reflects the relationship,
at the time of surrender, between the rate of interest credited to funds on
deposit under the Fixed Account Option at the time of discontinuance to the rate
of interest credited on new deposits at the time of discontinuance.
MARKET ADJUSTED VALUE: The value of funds held in the Fixed Account Option
increased or decreased by the Market Value Adjustment.
PARTICIPANT: An eligible person who is a member in a tax qualified Plan under
Sections 401, 403(b) or 457 of the Internal Revenue Code of 1986, as amended
(the "Code"), or a nonqualified deferred Compensation Plan.
PARTICIPANT'S INDIVIDUAL ACCOUNT: An account to which amounts are credited to a
Participant or Beneficiary under the contract.
PREMIUM TAX: A tax charged by a state or municipality on premiums, Purchase
Payments or contract values.
PURCHASE PAYMENT: The premium payment applied to the Contract.
SALES CHARGE: Any applicable surrender charge or contingent deferred sales
charge, as defined in the Contract.
SEPARATE ACCOUNT: The Travelers Separate Account QP for Variable Annuities.
SEPARATE ACCOUNT OPTION: A Funding option which varies with the investment
experience of the separate account.
3
<PAGE> 5
SUMMARY
- --------------------------------------------------------------------------------
This prospectus describes the Fixed Account Option available as a companion
contract with group variable annuity contracts of Separate Account QP. The
contracts are used with:
-- qualified pension and profit-sharing plans,
-- tax-deferred annuity plans (for public school teachers and employees
and employees of certain other tax-exempt and qualifying employers)
and
-- deferred compensation plans of state and local governments and
nonqualified deferred compensation plans.
The Travelers Insurance Company ("we" or the "Company") issues the contracts.
Purchase Payments made under the contracts and directed to the Fixed Account
Option become a part of the Company's General Account. Purchase Payments may
also be allocated to one or more Separate Account Options. The contracts and the
Separate Account Options are described in separate prospectuses. The
prospectuses for the annuity contract and underlying mutual funds will always
accompany this prospectus. Please read all prospectuses carefully.
During the Accumulation Period, the Fixed Account Option provides for Purchase
Payments to be credited with an initial interest rate for a 12-month period. The
initial interest rate will be declared quarterly for contracts issued in
connection with plans established under Section 401, Section 457, and certain
plans established under Section 403(b) of the Code. The initial interest rate
will be declared monthly for contracts issued in connection with combination
plans established pursuant to Sections 403(b)/401 and certain contracts issued
in connection with Section 403(b) plans.
At the end of the 12-month guarantee period, a renewal interest rate (of at
least 3%) will be determined by the Company. At the end of the initial guarantee
period, the first renewal rate will be guaranteed to the end of the calendar
year. The second and all subsequent renewal rates will be declared each January
1 thereafter, and will be guaranteed through December 31 of that year. The rates
of interest credited will affect a contract or account's Cash Value (see "Cash
Values"). Such rates may also be used to determine amounts payable upon
termination of the contracts. (See "Surrenders -- Contract Termination.")
Generally, the Company intends to invest assets directed to the Fixed Account
Option in investment-grade securities. The Company has no specific formula for
determining the initial interest rates or renewal interest rates. However, such
determination will generally reflect interest rates available on the types of
debt instruments in which the Company intends to invest the amounts directed to
the Fixed Account Option. In addition, the Company's management may also
consider various other factors in determining these rates for a given period,
including regulatory and tax requirements; sales commission and administrative
expenses borne by the Company; general economic trends; and competitive factors.
(See "Investments by the Company.")
The Contract Owner may, during the Accumulation Period, direct all or a portion
of a contract or account's Cash Value under the Fixed Account Option to one or
more of the investment options of the Separate Account. No Sales Charges will be
deducted on such transfers. However, there are restrictions which may limit the
amount that may be so directed and transfers may be deferred in certain cases.
(See "Transfers from the Fixed Account.")
Distributions and transfers from the Fixed Account Option are made on a last-in,
first-out basis. We will determine the cash surrender value as of the next
valuation date after we receive a written request at our Home Office. We reserve
the right to defer payment of the Fixed Account Option for up to six months from
the date we receive the written request. If a payment is deferred for more than
30 days after we receive the request, we will pay a minimum interest rate of 3%
on the amount.
4
<PAGE> 6
THE INSURANCE COMPANY
- --------------------------------------------------------------------------------
The Travelers Insurance Company is a stock insurance company chartered in 1864
in the state of Connecticut and has been continuously engaged in the insurance
business since that time. The Company is licensed to conduct life insurance
business in all states of the United States, the District of Columbia, Puerto
Rico, Guam, the U.S. and British Virgin Islands and the Bahamas. The Company is
an indirect wholly owned subsidiary of Citigroup Inc. The Company's home office
is located at One Tower Square, Hartford, Connecticut 06183.
YEAR 2000 COMPLIANCE
- --------------------------------------------------------------------------------
The Company is highly dependent on computer systems and system applications for
conducting its ongoing business functions. In 1996, the Company began the
process of identifying, assessing and implementing changes to computer programs
necessary to address the Year 2000 issue and developed a comprehensive plan to
address the issue. This issue involves the ability of computer systems that have
time sensitive programs to recognize properly the Year 2000. The inability to do
so could result in major failures or miscalculations that would disrupt the
Company's ability to meet its customer and other obligations on a timely basis.
The Company has achieved substantial compliance with respect to its business
critical systems in accordance with its Year 2000 plan and is in the process of
certification to validate compliance. The Company anticipates completing the
certification process by June 30, 1999. An ongoing re-certification process will
be put in place for third and fourth quarter 1999 to ensure all systems and
products remain compliant.
The total pre-tax cost associated with the required modifications and
conversions is expected to be between $25 million and $35 million and is being
expensed as incurred in the period 1996 through 1999. The Company has incurred
approximately $22 million to date on these efforts. The Company also has third
party customers, financial institutions, vendors and others with which it
conducts business and has confirmed their plans to address and resolve Year 2000
issues on a timely basis. While it is likely that these efforts by third party
vendors and customers will be successful, it is possible that a series of
failures by third parties could have a material adverse effect on the Company's
results of operations in future periods.
In addition, the Company is developing contingency plans to address perceived
risks associated with the Year 2000 effort. These include business resumption
plans to address the possibility of internal systems failures and the
possibility of failure of systems or processes outside the Company's control. As
of year-end 1998, the Company has completed initial business resumption
contingency plans which would enable business critical units to function
beginning January 1, 2000 in the event of an unexpected failure. Business
resumption contingency plans are expected to be finalized by June 30, 1999.
Preparations for the management of the date change will continue through 1999.
THE FIXED ACCOUNT OPTION
- --------------------------------------------------------------------------------
The Fixed Account Option is available only in conjunction with the purchase of a
variable annuity contract (Separate Account QP) issued by the Company. The
contracts provide for both an Accumulation Period and an Annuity Period. During
the Accumulation Period, the Employee/Trustee may direct Purchase Payments to
the Fixed Account (part of the Company's general account). During the Annuity
Period, the value of the Annuity Contract is used to purchase Fixed or Variable
Annuities. The operation of the contract during the Annuity Period is described
in the contract prospectus accompanying this prospectus.
5
<PAGE> 7
THE ACCUMULATION PERIOD
PURCHASE PAYMENTS
During the Accumulation Period, all or a portion of Purchase Payments (less any
premium taxes), may be allocated to the Fixed Account Option.
DECLARED INTEREST RATES OF THE INITIAL AND SUBSEQUENT RENEWAL PERIODS
The Fixed Account guarantees an initial interest rate for a 12-month period. For
the following contracts we will declare initial interest rates quarterly:
-- Gold Track Select contracts issued in connection with a plan
established under Sections 401, 457 or 403(b) of the Code,
-- Gold Track contracts for plans established under Sections 401, 457.
For the following, we will declare initial interest rates monthly:
-- Gold Track contracts issued in connection with a plan established
under Section 403(b) or combination contracts under Sections
403(b)/401.
At the end of the 12-month guarantee period, a renewal interest rate will be
determined. The rate will never be less than 3%. At the end of the initial
guarantee period, the first renewal rate will be guaranteed to the end of that
calendar year. The second and all future renewal rates will be declared each
subsequent January 1 and guaranteed through December 31 of each year.
Periodically, we will establish interest rates. These rates may apply to some or
all of the values under the Fixed Account Option for periods of time determined
by us. FOR EXAMPLE, WE COULD DECLARE AN INTEREST RATE HIGHER THAN THE OTHERWISE
APPLICABLE INITIAL INTEREST RATE(S) FOR A NINE-MONTH PERIOD AND THAT APPLIES
ONLY TO CASH VALUES ATTRIBUTABLE TO PURCHASE PAYMENTS RECEIVED IN A PARTICULAR
TIME PERIOD. The rates of interest credited will affect the Cash Value of the
contract or account and are used to determine amounts payable upon termination
of the contracts. We will provide written notification of any such interest rate
change and the values to which it will apply.
The interest rates are compounded, that is, all interest earned is credited
daily.
The Company has no specific formula for determining the rate(s) of interest that
it will declare. Generally, the rates we determine will reflect interest rates
available on the types of debt instruments in which we intend to invest the
amounts directed to the Fixed Account Option (see "Investments by the Company").
In addition, the Company's management may also consider various other factors in
determining interest rates for a given period, including regulatory and tax
requirements; sales commission and administrative expenses borne by the Company;
general economic trends; and competitive factors. THE COMPANY'S MANAGEMENT WILL
MAKE THE FINAL DETERMINATION AS TO ANY DECLARED INTEREST RATES AND ANY INTEREST
IN EXCESS OF THE GUARANTEED RATE OF 3%. THE COMPANY CANNOT PREDICT NOR GUARANTEE
THE RATES OF ANY FUTURE DECLARED INTEREST IN EXCESS OF 3%.
CASH VALUES
We will credit amounts held under the Fixed Account Option with interest. The
minimum guaranteed interest rate is 3%. Interest is credited daily. Purchase
Payments are allocated to the Fixed Account Option as of the close of the
business day on which we receive the Purchase Payment at the Home Office.
Therefore, Purchase Payments begin earning interest the day after we receive the
Purchase Payment in good order.
TRANSFERS FROM THE FIXED ACCOUNT
The Contract Owner may transfer amounts in the Fixed Account Option to one or
more of the Separate Account Options. The charges for transfers are described in
the contract prospectus
6
<PAGE> 8
which accompanies this prospectus. No Sales Charges apply when a transfer is
made. All transfers will be made on a last-in, first-out basis. That is, the
money most recently deposited or transferred into the account will be
transferred or surrendered first.
We reserve the right to limit transfers in any calendar year to 20% of the
Contract/Certificate Cash Value directed to Fixed Account Option as of the end
of the preceding calendar year. (See also "Surrenders.")
Transfers of assets presently held in the Fixed Account Option, or which were
held in the Fixed Account Option at any time during the preceding three (3)
month period, to any Competing Fund(s) may be subject to transfer restrictions.
Please refer to your contract Certificate.
TRANSFERS TO THE FIXED ACCOUNT
Values held in a Separate Account Option may be transferred to the Fixed Account
Option at any time subject to any Competing Fund restrictions which may apply.
The charges for transfers are described in the contract prospectus which
accompanies this prospectus. No Sales Charges apply when a transfer is made.
SURRENDERS
General
Subject to the termination provisions described below, the Contract Owner may
request a full or partial surrender of Cash Values at any time from the Fixed
Account Option.
Payment of Full or Partial Surrenders
In the event of a partial surrender from the Fixed Account Option, we will pay
the requested value less any applicable Sales Charges. All partial surrenders
will be made on a last-in, first-out basis. If an allocated account is
surrendered for reasons other than contract termination, we will pay the Cash
Value less any Premium Tax, the administrative charge, and any Sales Charges, as
applicable. PLEASE CONSULT THE ACCOMPANYING ANNUITY CONTRACT PROSPECTUS FOR ANY
APPLICABLE SALES CHARGES.
Contract Termination
If the Contract is discontinued, no further Purchase Payments or transfers will
be allowed. On the date we receive a written request to terminate the contract,
or within 31 days after we notify you of our intent to terminate the contract,
any amounts transferred from the Fixed Account Option to the Separate Account
Options during the 30 days before the date of discontinuance will be transferred
back to the Fixed Account Option.
If the Contract is discontinued because of Plan termination, due to the
dissolution or liquidation of the employer under US Code Title 11 procedures,
the Cash Surrender Value will be distributed directly to the employees entitled
to share in such distributions pursuant to the plan. Distribution may be in the
form of cash payments, annuity options or deferred annuities. This provision
does not apply to plans established under Section 457 of the Code.
If the Contract Owner requests a full surrender of the contract or of all
contract values held in the Fixed Account Option for reasons other than listed
above; or if the Company discontinues the contract, the Company will determine
the Market Adjusted Value of the Fixed Account Option.
The amount payable to the Contract Owner if a Contract is discontinued may be
lowered by the application of the Market Value Adjustment formula. The formula
is the following:
Market Adjusted Value = Cash Value X (1 + R0)(5)/(1 + R1 + .0025)(5)
Where:
R0 is the interest rate credited to amounts in the Fixed Account
Option at the time of termination,
7
<PAGE> 9
R1 is the interest rate credited on new deposits for this class of
contracts at the time of termination.
FOR CONTRACTS ISSUED IN EVERY STATE EXCEPT NEW YORK:
If, as of the date of discontinuance, the Market Adjusted Value is less than the
Cash Value of the Fixed Account Option, the Contract Owner may select one of the
payment methods described below:
1) the Market Adjusted Value (less any applicable Sales Charge) in one lump
sum within 60 days of the date of discontinuance, or
2) The Cash Surrender Value of the Fixed Account Option in installments
over a 5-year period. The amount deducted on Surrender, if any, is
determined as of the date of discontinuance, and will apply to all
installment payments. Interest will be credited to the remaining Cash
Value of the Fixed Account Option during this installment period at a
fixed effective annual interest rate of not less than 3%. The first
payment will be made no later than 60 days following the Contract
Owner's request for surrender or our written notification of our intent
to discontinue the contract. The remaining payments will be mailed on
each anniversary of the discontinuance for four years. During that
period, no additional surrenders are allowed.
If, as of the date of discontinuance, the Market Adjusted Value is greater than
the Cash Value of the Fixed Account Option, the Contract Owner may select one of
the payment methods as described below:
1) the Cash Surrender Value of the Fixed Account Option, in one lump sum
within 60 days of the date of discontinuance, or
2) The Cash Value of the Fixed Account Option in installments over a 5-year
period. Interest will be credited to the remaining Cash Value of the
Fixed Account Option during this installment period at a fixed effective
annual interest rate of not less than 3%. The first payment will be made
no later than 60 days following the Contract Owner's request for
surrender or our written notification of our intent to discontinue the
contract. The remaining payments will be mailed on each anniversary of
the discontinuance for four years. During that period, no additional
surrenders are allowed.
ALLOCATED CONTRACTS ISSUED IN NEW YORK:
If the Market Adjusted Value is less than the Cash Value of the Fixed Account as
of the date of discontinuance, We will pay You the Market Adjusted Value, less
any amounts deducted on surrender, less any loans outstanding in one lump sum.
This amount will never be less than 90% of the Cash Value of the Fixed Account,
less any outstanding loans as of the date of discontinuance. We may defer
payment of this amount for up to six months from the date of discontinuance. If
a payment is deferred more than 10 working days from the date of discontinuance,
we will credit interest during the deferred period in the same manner as
described in this rider.
If the Market Adjusted Value is greater than the Cash Value of the Fixed Account
as of the date of discontinuance, We will pay the Cash Surrender Value of the
Fixed Account as of the date of discontinuance in one lump sum. We may defer
payment of this amount for up to six months from the date of discontinuance. If
a payment is deferred more than 10 working days from the date of discontinuance,
we will credit interest during the deferred period in the same manner as
described in this rider.
UNALLOCATED CONTRACTS ISSUED IN NEW YORK:
You may select either of the following methods of payout:
8
<PAGE> 10
a) LUMP SUM PAYMENT OPTION. If the Market Adjusted Value is less than the
Cash Value of the Fixed Account as of the date of discontinuance, We
will pay You the Market Adjusted Value, less any amounts deducted on
Surrender, in one lump sum within 60 days of the date of discontinuance.
If the Market Adjusted Value is greater than the Cash Value of the Fixed
Account as of the date of discontinuance, We will pay You the Cash
Surrender Value of the Fixed Account within 60 days of the date of
discontinuance.
b) INSTALLMENT PAYMENT OPTION. We will pay You the Cash Value of the Fixed
Account in installments over a 5 year period. Interest will be credited
to the remaining Cash Value of the Fixed Account during this installment
period at a fixed effective annual interest rate of not less than 1.5%
below the net effective rate being credited to the contract on the date
of discontinuance. The first payment will be made no later than 60 days
following our mailing the written notice to You at the most current
address available on our records. The remaining payments will be mailed
on each anniversary of the discontinuance date for 4 years. Allowable
distributions shown on the Contract Specifications page are not
permitted during the 5-year installment period.
ANNUITY PERIOD
We will normally make annuity payments within fifteen business days after we
receive a settlement claim, or any other later specified date. Subsequent
payments will be made periodically on the anniversaries of the first payment.
The Separate Account contract prospectus describes more fully the Annuity Period
and annuity options under the contracts. Please note, however, that
annuitization is irrevocable; once fixed Annuity payments have begun, the
annuity benefit cannot be surrendered for a lump sum settlement.
INVESTMENTS BY THE COMPANY
- --------------------------------------------------------------------------------
We must invest our assets according to applicable state laws regarding the
nature, quality and diversification of investments that may be made by life
insurance companies. In general, these laws permit investments, within specified
limits and subject to certain qualifications, in federal, state, and municipal
obligations, corporate bonds, preferred and common stocks, real estate
mortgages, real estate and certain other investments. All General Account assets
of the Company would be available to meet the Company's guarantee under the
Fixed Account Option. The proceeds from the Fixed Account Option will become
part of the Company's general assets and are available to fund the claims of all
classes of customers of the Company.
In establishing Declared Interest Rates, the Company will consider the yields
available on the instruments in which it intends to invest the amounts directed
to the Fixed Account Option. The current investment strategy for the Contracts
is to invest in investment-grade fixed income securities, including public
bonds, privately placed bonds, and mortgages, some of which may be zero coupon
securities. While this generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
and state laws.
DISTRIBUTION OF THE CONTRACTS
- --------------------------------------------------------------------------------
CFBDS, Inc. is the principal underwriter of the Contracts. CFBDS, Inc. is
registered with the Securities and Exchange Commission under the 1934 Act as a
broker-dealer, and is a member of the National Association of Securities
Dealers, Inc.
The principal underwriter enters into selling agreements with certain
broker-dealers registered under the 1934 Act. Under the selling agreements such
broker-dealers may offer Contracts to
9
<PAGE> 11
persons who have established an account with the broker-dealer. In addition, the
Company may offer certificates to members of certain other eligible groups. The
Company will pay a maximum commission of 5% of the Purchase Payment for the sale
of a Contract.
From time to time, the Company may offer customers of certain broker-dealers
special Guaranteed Interest Rates and negotiated commissions. In addition, the
Company may offer Contracts to members of certain other eligible groups through
trusts or otherwise.
FEDERAL INCOME TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
Taxation of the Company
The Company is taxed as a life insurance company under Part I of Subchapter L of
the Code. The assets underlying the Fixed Account Option under the contracts
will be owned by the Company. The income earned on such assets will be the
Company's income.
Information Regarding the Contracts
The tax treatment of Purchase Payments and distributions is briefly described in
the accompanying Contract Prospectus.
AVAILABLE INFORMATION
- --------------------------------------------------------------------------------
The Company files reports, proxy statements and other information with the
Securities and Exchange Commission ("Commission"), as required by law. You may
read and copy this information and other information at the following locations:
- public reference facilities of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C.
- the Commission's Regional Offices located at Seven World Trade Center,
New York, New York 10048,
- the Commission's Regional Offices located at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Under the Securities Act of 1933, the Company has filed with the Commission a
registration statement (the "Registration Statement") relating to the Fixed
Account Option offered by this Prospectus. This Prospectus has been filed as a
part of the Registration Statement and does not contain all of the information
set forth in the Registration Statement and the exhibits, and reference is
hereby made to such Registration Statement and exhibits for further information
relating to the Company and the Contracts. The Registration Statement and the
exhibits may be inspected and copied as described above. Although the Company
does furnish the Annual Report on Form 10-K for the year ended December 31, 1998
to owners of contracts or certificates, the Company does not plan to furnish
subsequent annual reports containing financial information to the annuity owners
contract or certificate described in this Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
- --------------------------------------------------------------------------------
The Company's latest Annual Report on Form 10-K has been filed with the
Commission. It is incorporated by reference into this Prospectus and a copy must
accompany this Prospectus.
The Form 10-K for the fiscal year ended December 31, 1998 contains additional
information about the Company, including audited financial statements for the
Company's latest fiscal year. It was filed on March 17, 1999 via Edgar; File No.
33-33691.
10
<PAGE> 12
If requested, the Company will furnish, without charge, a copy of any and all of
the documents incorporated by reference, other than exhibits to those documents
(unless such exhibits are specifically incorporated by reference in those
documents). You may direct your requests to The Travelers Insurance Company, One
Tower Square, Hartford, Connecticut 06183-5030, Attention: Annuity Services. The
telephone number is (860) 422-3985. You may also obtain copies of any documents,
incorporated by reference into this prospectus by accessing the SEC's website
(http://www.sec.gov).
LEGAL OPINION
- --------------------------------------------------------------------------------
Legal matters in connection with federal laws and regulations affecting the
issue and sale of the Fixed Account Option described in this Prospectus and the
organization of the Company, its authority to issue such Contracts under
Connecticut law, and the validity of the forms such Contracts under Connecticut
law have been passed on by the General Counsel of the Company.
EXPERTS
- --------------------------------------------------------------------------------
The consolidated financial statements and schedules of the Travelers Insurance
Company and Subsidiaries as of December 31, 1998 and 1997, and for each of the
years in the three-year period ended December 31, 1998, have been incorporated
by reference herein and in the registration statement in reliance upon the
reports of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
11
<PAGE> 13
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 14
THE TRAVELERS INSURANCE COMPANY
REGISTERED FIXED ACCOUNT OPTION
FOR USE WITH GROUP ANNUITY CONTRACTS
L-12673 5/99
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Registration Fees: $55,600 for $200,000,000 in interests of Modified
Guaranteed Annuity Contracts
Estimate of Printing Costs: $15,000
Cost of Independent Auditors: $ 4,000
Item 15. Indemnification of Directors and Officers
Sections 33-770 et seq inclusive of the Connecticut General Statutes ("C.G.S.")
regarding indemnification of directors and officers of Connecticut corporations
provides in general that Connecticut corporations shall indemnify their
officers, directors and certain other defined individuals against judgments,
fines, penalties, amounts paid in settlement and reasonable expenses actually
incurred in connection with proceedings against the corporation. The
corporation's obligation to provide such indemnification generally does not
apply unless (1) the individual is wholly successful on the merits in the
defense of any such proceeding; or (2) a determination is made (by persons
specified in the statute) that the individual acted in good faith and in the
best interests of the corporation and in all other cases, his conduct was at
least not opposed to the best interests of the corporation, and in a criminal
case he had no reasonable cause to believe his conduct was unlawful; or (3) the
court, upon application by the individual, determines in view of all of the
circumstances that such person is fairly and reasonably entitled to be
indemnified, and then for such amount as the court shall determine. With respect
to proceedings brought by or in the right of the corporation, the statute
provides that the corporation shall indemnify its officers, directors and
certain other defined individuals, against reasonable expenses actually incurred
by them in connection with such proceedings, subject to certain limitations.
Citigroup Inc. also provides liability insurance for its directors and officers
and the directors and officers of its subsidiaries, including the Registrant.
This insurance provides for coverage against loss from claims made against
directors and officers in their capacity as such, including, subject to certain
exceptions, liabilities under the federal securities laws.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE> 16
Item 16. Exhibits
(a) Exhibits
1. Not Applicable.
2. None
3(a). Charter of The Travelers Insurance Company, as amended on
October 19, 1994. (Incorporated herein by reference to Exhibit
3(a)(i) to the Registration Statement on Form S-2, File No.
33-58677 filed via Edgar on April 18, 1995).
3(b). By-Laws of The Travelers Insurance Company, as amended on
October 20, 1994. (Incorporated herein by reference to Exhibit
3(b)(1) to the Registration Statement on Form S-2, File No.
33-58677 filed via Edgar on April 18, 1995.)
4. Contracts. (Incorporated herein by reference to Exhibit 4 to the
Registration Statement on Form S-2, File No. 333-10933 filed
August 28, 1996.)
5. Opinion Re: Legality, Including Consent. (Incorporated herein by
reference to Exhibit 5 to Post-Effective Amendment No. 2 to the
Registration Statement on Form S-2, File No. 333-10933 filed
April 9, 1998.)
10. None.
23(a). Consent of KPMG LLP, Independent Certified Public Accountants.
23(b). Consent of Counsel (see Exhibit 5).
24(a). Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Michael A. Carpenter, Jay S. Benet,
George C. Kokulis, Robert I. Lipp, Katherine M. Sullivan, Marc
P. Weill and Ian R. Stuart. (Incorporated herein by reference to
Exhibit 24 to the Registration Statement on Form S-2, File
No. 333-10933 filed August 28, 1996.)
24(b). Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for J. Eric Daniels and Jay S. Benet.
(Incorporated herein by reference to Exhibit 24 to the
Registration Statement on Form S-2, File No. 333-10933, filed
on April 12, 1999.)
27. Financial Data Schedule of The Travelers Insurance Company.
(Incorporated herein by reference to the filing on Form 10-K,
File No. 33-03094, filed March 17, 1999.)
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hartford, State of
Connecticut, on June __, 1999.
THE TRAVELERS INSURANCE COMPANY
(Registrant)
By:*JAY S. BENET
-------------------------------------
Jay S. Benet
Senior Vice President, Chief
Financial Officer, Chief Accounting
Officer and Controller
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on June __, 1999.
<TABLE>
<S> <C>
*MICHAEL A. CARPENTER Director and Chairman of the Board
- -----------------------
Michael A. Carpenter)
*J. ERIC DANIELS Director, President, Chief Executive Officer
- -----------------------
(J. Eric Daniels)
*JAY S. BENET Director, Senior Vice President,
- ----------------------- Chief Financial Officer,
(Jay S. Benet) Chief Accounting Officer and Controller
*GEORGE C. KOKULIS Director
- -----------------------
(George C. Kokulis)
*ROBERT I. LIPP Director
- -----------------------
(Robert I. Lipp)
*KATHERINE M. SULLIVAN Director, Senior Vice President and
- ----------------------- General Counsel
(Katherine M. Sullivan)
*MARC P. WEILL Director
- -----------------------
(Marc P. Weill)
</TABLE>
*By: /s/Ernest J. Wright, Attorney-in-Fact
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
--- ----------- ----------------
<S> <C> <C>
23(a). Consent of KPMG LLP, Independent Electronically
Certified Public Accountants.
</TABLE>
<PAGE> 1
Consent of Independent Certified Public Accountants
Board of Directors
The Travelers Insurance Company
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG LLP
Hartford, Connecticut
June 9, 1999
